Research and Trade Management · Futures Trading Guide

Entry rules are only part of a strategy. Exits, quantity changes and rolls determine how the initial idea becomes an actual account result.

Define the exit hierarchy

A plan may use a protective stop, a profit objective, a time exit or a signal reversal. Specify which instruction takes priority and how linked orders are updated after partial fills. Check broker behaviour when one order executes during a disconnect. An unneeded exit order can create a new position if it remains active after the original exposure is closed.

Calculate partial exits as separate fills

Assume two fictional long contracts enter at 100 with a $10 multiplier. One exits at 104 and the other at 98. The first earns $40 and the second loses $20, giving $20 gross profit. Dividing the outcome across a blended exit price is acceptable only if quantities are handled correctly. Record every commission and avoid applying a full position profit to each partial exit.

Treat adding size as a fresh decision

Adding to a winner or loser changes the quantity at risk and average entry. A protective stop moved closer does not guarantee that the new exposure is funded or safe. Recalculate cash loss scenarios, portfolio concentration and required collateral before adding. Assess whether scaling improves the tested method after costs rather than assuming it is automatically more professional.

Roll only when the exposure still has a purpose

A roll closes one maturity and establishes another. It does not erase a realised loss or validate an expired thesis. Check the new contract’s liquidity, price relationship, margin and settlement dates. Compare the cost and risk of continuing with the alternative of closing. Reconcile the strategy’s total result across all contracts without treating the roll price gap as instant profit or loss.

Try it yourself

Three longs enter at 50. One exits at 53 and two at 49, with a $20 multiplier. What is the gross result?

Show the worked answer

The first earns $60 and the other two lose $40 combined, leaving $20 before costs.

Further reading

Educational material. Prices, margins and strategy examples are hypothetical unless explicitly identified as contract specifications. They are not trade recommendations. Futures losses can exceed deposited collateral. Product terms and eligibility vary by venue and jurisdiction.

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